Strategist, entrepreneur and commentator Craig Coogan examines issues with his unique perspective. NOTE: The views expressed in this blog are of the author (Craig Coogan) alone. They do not represent any organization, client, or business that he may be associated with. You are welcome to comment below. Thank you for reading!

Thursday, April 3, 2014

Double Tailed Coin

The “heads or tails” game of flipping a coin is generally
fair – there’s an equal probability of one side of the coin coming up versus
the other. Only when the game is fixed – say with the double-headed-coin, does
it become unfair. The idiom “two sides of the same coin” is applied to things
that are essentially the same. In the case of American wages – a couple of recent
news events from what seem like opposite ends of the economic spectrum are, in
fact, more closely aligned than they are different.

Silicon Valley CEO’s of tech giants like Apple, Microsoft,
Facebook and others allegedly had agreements amongst themselves not to recruit,
hire or lure engineers away from each other based on a class action lawsuit
that is currently being tried, according to the New York Times. “The case involves 64,000 programmers and
seeks billions of dollars in damages.”
The companies previously settled with the Justice Department and agreed
to stop the no-poaching practice. Individual engineers, however, have formed a
class claiming that the companies undervalued their services by taking away the
element of competition that would have impacted their wages. According to
average salaries in the area – the base starting wage for this position is in
the $115 to $125,000 range.

On the other side of the spectrum President Obama has made
increasing the minimum wage a signature issue for 2014. According to the Huffington Post he wants the minimum to be $10.10 an hour, well above the current $7.25. In
fact he issued an Executive Order requiring Federal Contractors to pay the
$10.10 an hour to their employees.

In August 2013 I wrote back-to-back blogs about the issue –
Minimum Fairness and The Union Label. The posts addressed how a minimum wage
can’t address the essential inequalities that exist geographically and
culturally. What a family needs to earn in a rural town will be quite different
than what a family need needs to earn in a large metropolitan city. Eliminating
the minimum wage should be a boon to Unions as they would then step into the
role of protecting workers rights and negotiating wages – increasing their
rolls, dues, and influence.

The President’s unilateral action put Federal Contractors at
a competitive disadvantage. If a company does business both in the private
sector and in the government sector – they now carry a higher cost burden that
other businesses in their industry. To be able to offer goods and services to
the same customer base the company will either have to eliminate jobs or reduce
costs and quality elsewhere. Passing the additional cost to its customers with
higher prices will result in the competition winning more business.

In Silicon Valley Steve Jobs in death continues to wield
influence. He apparently came up with the no-poaching scheme, ensuring that no
other tech company could just pay more for the best engineers. That kept
turnover low, base wages steady and the companies colluding to manage costs. It
also likely lowered innovation. While the wages earned by highly skilled
engineers are eight to ten times higher than workers on the President’s minimum
wage – they weren’t in control of their earning ability.

Capitalism thrives and economies blossom when the market is
able to determine wages, benefits and employee value. The minimum wage issue
and the engineering collusion lawsuit seem to be quite different because of the
people impacted and the vast gulf between $10.10 and hour and $60 an hour
engineers make –but it really is two sides of the same coin. Somebody other
than the worker and their employer are determining their value individually and
in the marketplace. In one case it’s
companies colluding, in another its Government.
It’s just not what America’s supposed to be about…it’s unnatural, like a
double-tailed coin.